KUALA LUMPUR (Feb 23): Petronas Chemicals Group Bhd's (PetChem) net profit fell 76% to RM481 million or six sen per share for the fourth quarter ended Dec 31, 2022 (4QFY2022), from RM2.06 billion or 26 sen per share a year earlier, in line with lower earnings before interest, tax, depreciation and amortisation (Ebitda), unrealised foreign exchange loss, and lower profit contributions from joint venture and associates.

Revenue rose 25% to RM8.7 billion from RM6.98 billion, on the back of improved sales volume, a stronger US dollar and a higher revenue contribution from the specialties segment, despite the decline in average prices of products driven by softer demand, particularly for urea, methanol, polymers and glycols.

Ebitda was 25% lower at RM1.7 billion, mainly due to compressed margins.

For FY2022, the group's net profit fell 14% to RM6.3 billion, versus RM7.3 billion for FY2021, due to lower plant utilisation at 89%, compared with the previous year’s 93%, due to several statutory turnaround and maintenance activities.

Revenue rose 26% to RM28.9 billion, against RM23 billion for FY2021, which was attributed to higher product prices, coupled with the stronger US dollar, as well as revenue contributions from the recently acquired specialty chemicals subsidiary, Perstorp Holding AB. Following the acquisition of Perstorp, PetChem introduced a new operating segment of specialties in its 4QFY2022 financial statements.

PetChem also announced a second interim dividend payout of 16 sen per share, amounting to RM1.3 billion. The total dividend declared for FY2022 amounts to 72 sen per share or RM3.3 billion, representing 52% of profit after tax and non-controlling interests.

Managing director and chief executive officer Mohd Yusri Mohamed Yusof commented, “The completion of the Perstorp acquisition in October 2022 was a major milestone for PetChem. With the creation of the specialties segment comprising Perstorp and BRB, we can now participate in the attractive and fast-growing end markets, such as paints and coatings, personal care and animal nutrition, with extensive product offerings and sustainable solutions, in parallel with accelerating our growth and decarbonisation plans.”

PetChem MD and CEO Mohd Yusri Mohamed Yusof

On Malaysian operations, he added that the group achieved higher production and sales volumes, while the plant utilisation rate reached 100%, from 97% in 3QFY2022. However, margins were significantly compressed in 4QFY2022, as prices of all products declined due to lower global demand.

“Higher operational costs also added to the pressure. Despite the market volatility, PetChem achieved commendable full-year net earnings that we are able to distribute to our shareholders,” it said.

Mohd Yusri said the reopening of China and relaxation of its Covid Zero policy are positive for the chemicals sector, especially for polymers and olefins, which have seen a slight recovery in recent weeks.

"Nevertheless, we remain cautious, as prices of petrochemical products will continue to fluctuate.

“For example, prices of urea have unexpectedly declined sharply, despite the ongoing Russia-Ukraine war. We expect the first half of 2023 to be challenging, as we continue to face slow demand and higher costs due to inflation, particularly for our business in Europe and the US.”

On the Pengerang Integrated Complex, he said: “We have gradually resumed start-up of petrochemical plants, following complete rectification of the affected pipelines, after the incident in October 2022.”

Updating on the group’s sustainability efforts, Mohd Yusri said, “We have set a target to reduce an accumulative 100,000 tonnes of carbon dioxide equivalent (tCO2e) in greenhouse gas emissions within our Malaysian operations by 2024.

"Through operational optimisation initiatives, we achieved a total reduction for Scope 1 and Scope 2 emissions of about 108,000 tCO2e at the end of 2022, ahead of our planned timeline."

In the future, the group plans to capitalise on Perstorp’s Project Air, an innovative approach involving carbon-capture technology to produce sustainable methanol, which will help bring PetChem closer to realise its net zero aspiration by 2050.